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Productivity Numbers Are Bad--Are We Spending Too Much On R&D And Not Enough On Innovation?


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November 02, 2006

Productivity Numbers Are Bad--Are We Spending Too Much On R&D And Not Enough On Innovation?

Bruce Nussbaum

The latest batch of numbers on productivity growth are awful and this bodes ill for the future if they continue. I know the conventional wisdom is that private spending for R&D is falling and that causes productivity to fall as well.

But invention is not innovation and spending on R&D is no guarantee that you will get the kind of innovation that generates revenue growth, profits, wealth and jobs. Many corporations are trimming their R&D--outsourcing much of it to networks of scientists and engineers--and boosting their innovation hit rates.

But clearly not enough. I joke that innovation is the new black because everyone talks about it these days, but the truth is that very, very few CEOs and managers know how to implement it. The gap between their mouthing the word innovation and their allocating resources to make it happen is wider than the gap between their compensation and the pay of their average employee (sorry but incentives play a serious role in building an innovation culture).

The low productivity growth numbers reflect the slo-mo adaptation of innovation processes and methodologies throughout Corporate America. Take away the handful of companies held up as examples by the business press, and you have hundreds of other companies still struggling to figure out how to take the first steps in creating an innovation culture. Tick tock folks.

02:27 PM

innovation

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I think that the main reason that innovation is not becoming actionable in as many companies that need it is that it requires changing just about everything. Everyone in the organization needs to be trained/enlightened/educated, the reward system needs to be changed, the way resources are allocated needs changing--the way people work, reporting relationships, bringing in research, the breaking down of silos, the weeding out of people who want to maintain the status quo, it is not difficult to understand why this is.

Posted by: RitaSue Siegel at November 6, 2006 03:03 AM


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